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2025 (1) TMI 1462 - AT - CustomsRevocation of their customs broker licence - forfeiture of entire amount of security deposit - Levy of penalty - importation of black pepper and cigarettes - breach of regulation 10(d) and 10(n) of Customs Brokers Licensing Regulations 2018. Breach of regulation 10(d) of Customs Brokers Licensing Regulations 2018 - HELD THAT - Regulation 10(d) of Customs Brokers Licensing Regulations 2018 prescribes that a customs broker is required to advice his client to comply with the provisions of statute and in the event of non-compliance to bring the matter to the notice of the designated official. This charge has been established on the finding that the appellant had never met the proprietor of the importing entity and had not contacted the holder of the Importer-Exporter Code (IEC) thus precluding rendering of advice - The licensing regulations are also bereft of any definition of client and it would appear that there is no bar on the importer/exporter approaching the customs broker through an employee/agent. The essence of this obligation is restricted to the advice given specifically in relation to a particular consignment and is not broad enough to place the onus of educating the importer/exporter on the letter and spirit of customs statute on the customs broker. The factual circumstances in which this charge came to be laid at the door of the customs broker is not evident in the records. Imputations are inadequate the findings based on facts which have nothing to do with the framework of the obligations and externalities have been grafted to conclude that the regulation has been breached. Breach of regulation 10(n) of Customs Brokers Licensing Regulations 2018 - HELD THAT - It is necessary for customs broker to be particularly careful about credibility of clients before undertaking to handle customs procedures. The mandate of the obligation is for ascertaining the existence of the client the operation of the premises at which the client is reported to be functioning and the documents that are required for imports and exports. It is apparent that the customs broker had not carried out the mandate of the obligation inasmuch as the importer was reported as not existing at the stated address and the customs broker has been unable to produce evidence not only of such existence but also of having verified the antecedent before securing the authorization for handling the consignment. In these circumstances breach of regulation 10(n) of Customs Brokers Licensing Regulations 2018 cannot but to be held as proved. As it is only this breach which may be held as proved the imposition of all the detriments offered by Customs Brokers Licensing Regulations 2018 appears to be disproportionate. Penalty - HELD THAT - Considering the specific breach and the gravity of the consequence of such breach ends of justice would be met by setting aside the revocation under regulation 14 of Customs Brokers Licensing Regulations 2018 and imposition of penalty under regulation 18 of Customs Brokers Licensing Regulations 2018. Conclusion - i) The breach of Regulation 10(n) was proven due to the customs broker s failure to verify client details adequately. ii) The penalties of license revocation and monetary penalty were disproportionate to the breach established. iii) The forfeiture of the security deposit was upheld with provisions for license restoration contingent on a new security deposit. Appeal disposed off.
The appeal before the Appellate Tribunal, CESTAT Mumbai, concerns the revocation of a customs broker license and the forfeiture of a security deposit under the Customs Brokers Licensing Regulations, 2018. The core issues revolve around alleged breaches of specific regulations by the customs broker, M/s Cargo Yatri Private Ltd, in relation to the importation of goods declared as 'perlite ores' but found to be 'black pepper' and 'cigarettes'.
The primary legal questions considered were:
Regarding Regulation 10(d), the Tribunal analyzed the obligation of a customs broker to advise clients on compliance with customs statutes. The Tribunal noted that the licensing authority failed to demonstrate that incorrect advice was rendered by the broker. The customs broker, being a private limited company, had a structure that was not adequately considered by the licensing authority. The Tribunal emphasized that the regulation does not impose a broad educational duty on brokers but is limited to advice related to specific consignments. The lack of evidence linking the broker's conduct to a breach of this regulation led the Tribunal to conclude that the charge was unsubstantiated. Under Regulation 10(n), the Tribunal examined the requirement for customs brokers to verify the authenticity of client details using reliable documents. The licensing authority's reliance on the non-response to summons at the importer's address was pivotal in concluding the importer was non-functional. The Tribunal found that the customs broker failed to verify the existence and operational status of the client before handling the consignment, as required by the regulation. The inability to produce evidence of such verification constituted a breach of Regulation 10(n). The Tribunal considered the proportionality of the penalties imposed. While acknowledging the breach of Regulation 10(n), it deemed the revocation of the license and imposition of the penalty as disproportionate given the specific circumstances. The Tribunal decided to set aside the license revocation and penalty imposition but upheld the forfeiture of the security deposit. It allowed for the restoration of the license upon the appellant making a fresh security deposit as per the regulations. The Tribunal's significant holdings included:
The appeal was disposed of on these terms, providing a nuanced interpretation of the obligations under the Customs Brokers Licensing Regulations, 2018, and emphasizing the need for proportionality in regulatory penalties.
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